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Econometric Analysis in Lost Profits

An Econometric Analysis focuses on the application of economic theories and methods to legal issues, particularly in the assessment of lost profits. Join experts, Josh Shilts, CPA, ASA, ABV/CFF/CGMA, CFE and Brian Rohl, CPA, ABV, CFF, as they use a Regression Analysis to demonstrate how economic factors impact financial outcomes in legal cases. This session will include a real-life case study utilizing a Regression Analysis and includes the review and analysis of an incremental cost ...

Expert’s critique of opposing valuation gets excluded

In a Tennessee damages case, the defense engaged a valuation expert to do two things: (1) critique the valuation report of the opposing side; and (2) offer his own estimate of damages.

Another expert ‘Dauberted’ out of a damages case

In last week’s issue, we reported on a damages case in which a valuation expert’s testimony was excluded because of the methodology used in the analysis. In this week’s case (also a damages matter), the expert didn’t even get that far before being excluded.

Lost profits calculation goes off the track

In a Missouri breach of contract case, the plaintiffs were carriers who delivered print newspapers to subscribers under an agreement that gave them territorial rights.

Rieves v. Town of Smyrna

The plaintiffs’ business was allegedly damaged by the actions of the defendant. The plaintiffs engaged an expert in economic damages and lost profits. The defendants engaged their own expert to provide his opinions as to why he believed the plaintiffs’ expert’s opinions were unreliable. The court ultimately excluded this portion of the defendants’ expert’s testimony. The defendants’ expert’s calculation of damages, however, was a matter for cross-examination and will be allowed.

U.S. District Court Excludes Expert’s Testimony on Critique of Plaintiffs’ Damages but Allows Same Expert Testimony on His Damages Calculation

The plaintiffs’ business was allegedly damaged by the actions of the defendant. The plaintiffs engaged an expert in economic damages and lost profits. The defendants engaged their own expert to provide his opinions as to why he believed the plaintiffs’ expert’s opinions were unreliable. The court ultimately excluded this portion of the defendants’ expert’s testimony. The defendants’ expert’s calculation of damages, however, was a matter for cross-examination and will be allowed.

Bextermueller News Distribs., Inc. v. Lee Enters.

In determining damages, the plaintiffs’ damages expert used a method of determining damages revolving around a calculation of lost revenue. The defendants argued the testimony was irrelevant and unreliable because the lost revenue calculations were based on the erroneous premise that the plaintiffs were entitled to recover, as damages, delivery fees for digital subscribers to a newspaper. The court disagreed and excluded the expert’s testimony under Rule 702.

Plaintiff Expert Is Excluded—Lost Revenue Calculation Is Not an Approach Allowed for Damages in Missouri (Rule 702 Exclusion)

Plaintiff news carriers operated as home delivery carriers under a contract with the defendant newspaper. Around 2017, the defendant began offering an electronic version of the newspaper, allegedly breaching the exclusive territorial provisions of the contract with the carriers. In determining damages, the plaintiffs’ damages expert used a method of determining damages revolving around a calculation of lost revenue. The defendants argued her testimony was irrelevant and unreliable because her lost revenue calculations were based on the erroneous premise that the plaintiffs were entitled to recover, as damages, delivery fees for every digital subscriber. The court disagreed and excluded the expert’s testimony under Rule 702.

Global BV News: New CBV Insight on ESG published

A new paper explores the value impacts of environmental, social, and governance (ESG) factors in private companies.

Recovery of both lost profits and disgorgement not allowed in New York case

In a New York case, the issue of damages involved a Lego interpretation model of the Second Beit Hamikdash, or Second Holy Temple, and an alleged infringement of the copyright on this model (click here to see the model).

Valuation in Times of High Inflation

Over the past year, inflation rates as measured by the U.S. Consumer Price Index have moderated but remain well above the Federal Reserve’s long-term target rate of 2%. The Federal Reserve continues to take measures to control the elevated levels of inflation by raising interest rates and tightening monetary policy. With elevated inflation levels and high interest rates, valuation analysts continue to be challenged with incorporating these macroeconomic trends into the valuation of closely held ...

JBrick, LLC v. Chazak Kinder, Inc.

The defendants challenged the testimony of the plaintiff’s damages expert, and the plaintiff challenged the testimony of the defendants’ damages rebuttal expert. The case involved a Lego interpretation model of the Second Beit Hamikdash, or Second Holy Temple, and an alleged infringement of the copyright on this model. The court struck the plaintiff’s expert’s damages of a product related to the Temple Product but allowed testimony of damages on the Temple Product. The court also struck the plaintiff’s expert’s testimony that the plaintiff should be awarded lost profits on the Temple Product plus a disgorgement of the defendants’ profits. Both may not be awarded. The court also struck portions of the defendants’ rebuttal testimony and report.

Daubert Challenges on Experts on Damages Partially Successful

The defendants challenged the testimony of the plaintiff’s damages expert, and the plaintiff challenged the testimony of the defendants’ damages rebuttal expert. The case involved a Lego interpretation model of the Second Beit Hamikdash, or Second Holy Temple, and an alleged infringement of the copyright on this model. The court struck the plaintiff’s expert’s damages of a product related to the Temple Product but allowed testimony of damages on the Temple Product. The court also struck the plaintiff’s expert’s testimony that the plaintiff should be awarded lost profits on the Temple Product plus a disgorgement of the defendants’ profits. Both may not be awarded. The court also struck portions of the defendants’ rebuttal testimony and report.

Damages waiver precludes lost profits claim

In an Illinois case, a contract for consulting services for an online platform was terminated and the terminating party was supposed to return the source code to the other party but did not, breaching the contract.

Use of Forensic Evidence in a Lost Profits Case

Financial forensics experts are often called upon to measure the lost profits a business suffered as a result of the actions of another party. The measurement typically compares the profits of the company had the defendant not acted inappropriately to the profits that the company actually realized. Because lost profits measurement involves the calculation of the value of something that should have happened but did not, the process must incorporate assumptions and significant reliance upon ...

Damages Guide Editors Offer Insights and Advice to Valuers

Business Valuation Update had the pleasure of sitting down with the editors of the recently published 7th edition of BVR’s Comprehensive Guide to Economic Damages. They gave some insights into recent developments and some advice for experts who practice—or are thinking of practicing—in this area.

Patent Infringement Damages: Lost Profits and Royalties

If a patent owner can prove another company or party has made, used or sold a product covered by a patent without its permission, the patent owner is entitled, under 35 U.S.C. Section 284, to receive “damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.” This program focuses ...

Calculating But-For Profits

Do you feel like being asked to calculate but-for-profits feels like an engagement in another dimension? Calculating the position the harmed party would have been in “but for” the alleged acts is an advanced skill for appraisers. Join expert and contributing author to The Comprehensive Guide to Economic Damages, Stacey Udell, for a discussion of different strategies to determine net lost profits including the critical step of removing incremental costs that did not occur. Every ...

Calculating Damages for Early-Stage Companies

Measuring lost profits damages for new or early-stage businesses can be a daunting task. Traditional damage analyses that rely on historical results are often meaningless since, by definition, startup companies usually lack a track record of operating results. Without an operating history for measuring lost profits, the damages expert walks a thin line between speculation and reasoned analysis. Under most circumstances, to be admissible evidence, damage analyses require a relevant and reliable factual basis. These ...

New Damages Guide Examines Crypto Landscape

An understanding of the current issues and developments within the cryptocurrency industry, plus a look at some emerging case law, are crucial for damages experts in this area. This is an excerpt from the upcoming 7th edition of The Comprehensive Guide to Economic Damages.

Damages experts point to areas of practice growth

Damages related to cannabis firms, cryptocurrency, and intellectual property are on the rise, according to the editors of the recently released 7th edition of BVR’s Comprehensive Guide to Economic Damages.

New edition of BVR’s guide to economic damages is available

The Comprehensive Guide to Economic Damages, already the profession’s leading guide of its type, is now even more wide-ranging in its new 7th edition, which has just been released.

Damages experts caught up in Irish bar fight

In a New York case, majority owners of an Irish soccer bar used the proceeds of a lease buyout to relocate the bar—and cut out the minority owners at the same time.

Johnston v. Vincent

The plaintiffs and defendants in this case, upon appeal to the Supreme Court of Louisiana, appealed certain rulings of the Louisiana Court of Appeals. The defendants asserted that the Court of Appeals failed to apply the manifest error standard correctly in reversing the district court’s findings of what constituted trade secrets and their misappropriation. The Supreme Court reversed the Court of Appeals on this issue. The Supreme Court also reversed the Court of Appeals as to the increase in the amount of lost profits damages. The Supreme Court also affirmed the Court of Appeals in its determination that actual damages must be trebled and that unjust enrichment damages must be awarded in some amount but were not to be trebled.

Louisiana Supreme Court Reverses Appellate Court as to Misapplication of the Correct Manifest Error Standard, Other Damages-Related Issues

The plaintiffs and defendants in this case, upon appeal to the Supreme Court of Louisiana, appealed certain rulings of the Louisiana Court of Appeals. The defendants asserted that the Court of Appeals failed to apply the manifest error standard correctly in reversing the district court’s findings of what constituted trade secrets and their misappropriation. The Supreme Court reversed the Court of Appeals on this issue. The Supreme Court also reversed the Court of Appeals as to the increase in the amount of lost profits damages. The Supreme Court also affirmed the Court of Appeals in its determination that actual damages must be trebled and that unjust enrichment damages must be awarded in some amount but were not to be trebled.

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